Migration, and skills disparities across the Canadian provinces By Serge Coulombe & Jean-François Tremblay Department of Economics University of Ottawa We are grateful to Ivelina DeLeva and Betty You for research assistance and to the HRDC-IC-SSHRC Skills Research Initiative for financing.

Motivations of the study Human capital (H) one of the key determinants of living standards across developed countries H (output) is “produced” by a combination of factors or inputs such as (years of schooling, quality of education, experience and pertinence of experience). In standard approaches (labour economics, development accounting) H is measured by an input most specifically schooling, S We provide output measures of the aggregate human capital intensity of Canada and the ten provinces from skill data (IALLS 2003)

Skills matter

Motivations of the study Does-it matters to use an input or and output measure? Answer: YES when comes the time to measure the contribution of international immigration (II) to the human capital intensity Why? International immigrants have more years of schooling but substantially less skills (Skill-schooling gap) than the Canadian-born population Does-it matter a lot? YES, From a schooling measure, II contribute to slightly decrease human capital disparities across provinces, from a skill measure, the effect of II is to decrease regional disparities by 45%

Data Construction of aggregate data base from raw data of 2003 Canadian sample of International Adult Literacy and Skills Survey (IALSS) IALSS designed to capture skill differences across countries and across subgroups of the population with different cultural backgrounds. IALSS is a stratified multi-stage sample, population 16 years and over, we use a sample of respondants, from the ten provinces, Canadian-born, and 3460 foreign-born Average data from four literacy domains: prose, document, numeracy, and problem solving

Two Contributions of the paper 1- The effect of migration flows (interprovincial and international) on Canadian provincial disparity International migration decreases provincial disparities (human capital) whereas inteprovincial migration increases them. The first effect dominates the second. Simple accounting approach, the second effect dominates with input measure (schooling) for international migration. Natural extension of the regional convergence research program that goes back to Coulombe and Lee (1995), Coulombe (2000) with the focus on human capital: Coulombe and Tremblay (2001), Coulombe (2003), and Coulombe and Tremblay (2006).

Second: Schooling is a biased indicator of human capital at the cross-country level This is the natural extension of our recent research program on explaining cross-country differences in living standards with a special emphasis on human capital Borjas (1987) (earning is associated with Q (EQ)) Klenow and Rodriguez-Clare (1997) (development accounting, EQ) Hendricks (2002) (development accounting, EQ) Manuelli and Seshadri (2005) (development accounting, theory of EQ) Sweetman (2004) (Canadian immigrant and quality of education, Skill with Q) Ferrer, A., D. A. Green, and W. C. Riddell (2004) (micro skills of international migrants) Coulombe, Tremblay and Marchand (2004) (growth regression, Schooling versus skill) Coulombe and Tremblay (2006) (Canadian province versus CTM 2004)

I- International migration and the skill-schooling gap H=F(S, Q, …)

China4.11Sri Lanka5.03Sub-Saharan English 5.92 EI Salvador4.93Taiwan 3.56Sub-Saharan French 1.09 France2.09UK1.08South-East Asia 3.36 USSR5.69US0.65South-East Asia-Dev 0.64 Vietnam 3.75 Romania 2.42 Jordan, Turkey, Syria 3.95 Guyana3.78Algeria and 4.11South Africa Germany2.45 TunisiaSouth Korea 5.48 HK2.82Austria and -0.79Morocco 5.10 India5.26 SwitzerlandArgentina, Brazil, Uruguay 1.50 Iran3.01Bangladesh5.03Bolivia, Chile, Peru 6.12 Italy1.73Belgium and 0.75Paraguay Jamaica4.96LuxemburgOther South America 5.26 Lebanon4.06Egypt4.58Other Caribbean 5.10 Mexico3.94Greece5.72Netherlands 0.04 Haiti5.65 Portugal 1.80 Other Oceania 4.35 Pakistan6.18Ireland2.38North Europe 2.60 Philippines4.27Israel3.11East Europe 3.65 Poland5.65Japan3.66Trinidad and Tobago 3.46 List of the Skill-Schooling GAP of the Origin Countries (Taken from Yan Hou 2008)

II- Migration and provincial disparity Skill intensity of foreign-born population varies widely across provinces  Tends to reduce provincial disparities Typical interprovincial migrant has a skill level higher than the non-migrant  Skill redistribution process from the poorer to the richer Canadian provinces

Net effect of both channels on provincial disparity A - The dispersion (SD) of skill intensity across Canadian provinces is reduced by 45 percent when international immigration is accounted for. (By comparison, international immigration reduces the dispersion in years of schooling by only 9 percent ) B - Interprovincial migration accounts for an increase of 21 percent of the dispersion of the skill intensity across the Canadian provinces. Effect A dominates B, result from the skill (instead of schooling) approach

Main findings Schooling is a biased indicator of human capital (skills) at the cross-country level  Potential implications for the immigration selection process and for Foreign Credential Recognition (FCR) program: recognize and select from skills International immigration and interprovincial migration have opposite effects on provincial disparities  Net effect is to decrease disparities